DCIT CIRCLE-4(2), NEW DELHI vs. CITILAND COMMERCIAL CREDITS LTD., NEW DELHI

10.2020 is a time barred appeal which is to be dismissed since not filed within stipulated period of 60 days from the date of receipt of the Appellate order. 2. That on the facts of the case and in law CIT (A) - 2 order as well as the order of ACIT Circle-6(1) u/s 143 (3) are both illegal, since based on erroneous foundation. No valid notice u/s 143 (2) was issued by the Juri ictional AO. Notice u/s 143 (2) issued by a Non-Juri ictional ITO Ward 3 (3), makes the assessment invalid and all consequent orders including order of CIT (A) -2 is also an illegal order. 3. i. That as per the CBDT directions in respect of juri iction for assessment of incomes in Delhi Ward ITO can make an assessment of incomes up to Rs. 30 Lacs and beyond Rs. 30 Lacs, it is to be assessed by the Circle Assistant Commissioner of Income Tax. ii. That the illegal assessment made without valid juri iction and confirmed by CIT (A)-2 be annulled. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal.”

Learned Authorized Representative for the Revenue submitted that Ld. CIT(A) erred in ignoring the fact that assessee had concealed the income and from Agreement to sell and earned additional interest described as loss of profit/cost in agreement to sell. Whenever there are two segments of the proceedings one is the initiation of proceedings by one AO/ territorial juri ictional Assessing Office as per the prima-facie at that point of time, following the due process of law. And the second is the completion of the assessment by the other AO, ward/circle in continuation of the said proceedings. The actions of both the AOs are very much within the meaning of section 129

3 Further, reliance is taken on the decision of the Hon'ble Delhi High Court in the case of Abhishek Jain Vs ITO dated 1.6.2018. 7. The Learned Authorised Representative for the respondent/assessee submitted that;

There is no error in the order of the Ld. CIT(A) in deleting the addition of Rs. 6,29,86,012/- towards alleged earning of additional interest in terms of Agreement to Sell: 1.1 Same issue has been favorably decided in the appellant own case for AY 2014-15 by CIT(A) 31 in appeal no. 246/18-19/10639/16-17 vide order dated 26.07.2019 and addition of Rs. 1,29,77,950/- is deleted. The issue is discussed under para 4.1 on internal Pg. No. 31&32 of appeal order (Pg. 38&39 of PB-II). Please refer Pg. No. 8 to 41, PB-II for CIT Order. The said deletion of similar additional interest of Rs. 1,29,77,950/- has been accepted by the IT department. There is no appeal against the order of CIT(A) for AY 2014-15. 1.2 CIT(A)-31 in the order for AY 2014-15 in the appellant's own case under para 4.1 at internal Pg. 32 has also relied upon the decision of CIT(A)-24 in order dated 20.11.2016 in the case of SA Developers Pvt. Ltd. - Appeal No. 75/2015-16-AY2013-14 wherein similar addition on account of additional interest on loans granted to same borrower M/s Oris Infrastructure Pvt. Ltd. was deleted. The above decision is also accepted by the IT department. No appeal is filed against the said order of CIT(A). 1.3 Ld. CIT (A) -2 while dealing with the instant case has discussed the issue under para 5&6 of the appellate order on page 6 to 8 and has accepted the contentions of the appellant that: a) No additional interest was received or accrued to the appellant. b) No corroborative evidence of having earned / received additional interest is brought on record by the AO. c) Affidavit furnished by the borrower Oris Infrastructure Pvt. Ltd. is also categorical in the rate of interest paid. The affidavit was accepted after a remand report from Ld. AO seeking dismissal of additional evidence. d) CIT(A) has also relied upon the decision of coordinate office of CIT(A)-31 in the case of the appellant for AY 2014-15 in appeal no. 246/18-19/10639/2016-17 dated 26.07.2019

Learned Authorised Representative for the respondent/assessee submitted that cross-objection no.1 is not pressed and ground nos. 2 & 3 raise legal issues namely:

Assessment made u/s 143(3) by ACIT Circle - 6(1) on the basis of notice issued by a non-juri ictional AO Ward - 3(3); 1.1 ITR declaring an income of Rs. 5,11,66,664/- filed on 30.09.2013- (page 29-31, PB-I); Notice u/s 143(2) dated 02.09.2014 is issued by ITO Company Ward- 3(3), who had no juri iction to assess an income of Rs. 5,11,66,664/-, since as per the juri iction fixed by CBDT, Ward ITO could assess income up to Rs. 30 Lakhs only (PB-1, Pg. No. 227 to 234 of PB-I). 1.2 The assessment made u/s 143(3) vide order dated 08.03.2016 by ACIT Circle - 6(1) is an illegal order since based on notice u/s 143(2) issued by a non-juri ictional AO. The juri ictional AO Circle - 6(1) did not issue any notice u/s 143(2) before making assessment on 08.03.2016. 1.3 In support of our submissions, we rely upon copies of case laws attached at Pg. No. 42 to 87 of Case Law Paper Book and Case Laws referred under Sr. No. (i) to (vi) at Sr. No. B(6) of Case Law Paper Book.

From examination of record in light of aforesaid rival contentions, it is crystal clear that Ld. AO in order dated 05.03.2016 in para 3.15 has stated as under: “3.15 Therefore, an amount of Rs. 5,48,79,565/- is hereby added to the income of the assessee for additional interest earned by it on secured loans given as computed above. In the details given by the assessee vide its letter dated 8.10.2015, from which the above additions for income on account of additional interest has been computed, shows income from interest of Rs. 4,22,78,929/-. The assessee has also furnished details of interest earned on unsecured loans which provides detail of interest

Ld. CIT(A) in order dated 24.07.2020 in paras no.6.1 to 6.3 has observed as under: “6.1 The issue is whether the appellant was in receipt of any additional interest, which has been termed as loss of profit or cost. Moreover, any such receipt is also contingent on the happening of another event i.e. rescinding of the contract. Admittedly, the AO has not brought on record any evidence which will go on to prove either of the two events. No evidence or documents have been brought on record by the AO to buttress his presumptions in this respect. It is an admitted fact that such a practice is followed by entities engaged in this line of business. This provides them with security with respect to amount advanced. It is generally in the nature of a collateral. 6.2 The affidavit furnished by the M/s Orris Infrastructure Pvt. Ltd. which was forwarded to the AO, is also categorical in the rate of interest paid. The AO at the stage of remand proceedings could have also undertaken necessary exercise to collect evidence in support of facts brought out during the course of assessment proceedings. No such exercise was carried out. Only the legality of its admittance is the subject matter of AO's report. Dismissal of the contentions raised by AO at the appellate stage in a cryptic manner, does not aid the addition made by the AO. In the absence of the same, the affidavit of the party has to be treated as a confirmation and non-rebuttal by the AO, makes its acceptance, a legal requirement.

3 The Ld. CIT(A) in the case of the appellant (for the AY 2014-15) vide Appeal No. 246/18-19/10639/16-17 dated 26.07.2019, has held that no addition can be made on notional income, without having been received or accrued. The decision was rendered on identical facts. There is no reason to differ from the said findings. 11. From perusal of above findings of Ld. AO and Ld. CIT(A), it is evident that assessee was in receipt of additional interest which has been termed as loss of profit or cost. The affidavit of M/s. Oris Infrastructure Pvt. Ltd. (Oris) is categorical regarding payment of interest. In case of assessee for assessment year 2014-15, it was held in order dated 26.07.2019 that no addition can be made on notional income without having been received or accrued. Therefore, findings of Ld. CIT(A) are just fair, reasonable and legal. The ground of appeal no.1 being de void of merit is dismissed. 12. In view of findings on ground of appeal no.1 of Revenue, grounds of appeal nos. 2 and 3 of cross-objection being academic in nature and are left open. Ground of appeal no.1 of assessee’s appeal is dismissed as not pressed. 13. In the result, the appeal of Revenue and Cross-Objection by assessee are dismissed. Order pronounced in the open court on 16 July, 2025. (S RIFAUR RAHMAN) (VIMAL KUMAR)